Management Glossary

  Search Results: economic order quantity
economic order quantity

The quantity of a supply that a company should buy in order to incur the least cost. There are a number of factors that enter into this equation, including, among others:

  • discounts offered by the vendor for buying in bulk
  • the length of time that it takes for an order to be filled and delivered to the buyer
  • the variability in order fulfillment times
  • the costs that will be incurred in the invent of running out of stock
  • the cost of financing inventories

Abbreviated as EOQ. Also referred to as optimal order quantity or Q*

Contributed by: Managerwise Staff

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